Knowing the ins and outs of this country’s health insurance program for seniors is not exactly child’s play—Medicare is a truly complex system. Still, if you’re approaching 65 or are a caregiver, it’s wise to get a handle on the basics of the system. Read on for our look at the main features of Medicare.
Part A (Hospital Coverage)
Medicare is organized in four sections, parts A through D. Part A, which along with Part B comprises the Original Medicare Plan, is free to Americans who've had Medicare taxes withheld from their pay for at least 40 calendar quarters. This coverage helps pay the costs of inpatient hospital services including general nursing, medications administered in hospital, meals and semi-private room (private rooms may be covered if medically necessary). Take heed that to be considered an inpatient a doctor must have ordered your hospitalization.
For the most part, Medicare does not cover costs of long-term care—but under certain limited circumstances, Part A will pay for skilled nursing facilities and home health services, including medically necessary part-time skilled nursing care, physical or occupational therapy, and home health aide services. Part A will also cover hospice care and medication for patients with a terminal illness who are expected to die within six months. In addition, Medicare pays for some short-term hospital stays and inpatient care for caregiver respite.
Note: Those who deplete their assets (the cut-off number varies from state to state) can apply for Medicaid, which can be used to pay for long-term nursing care in all states and for assisted living communities in many states. (Be advised, however, that not all nursing homes or assisted living communities accept Medicaid.) Some states also offer PACE (Program of All-inclusive Care for the Elderly), a program that helps Americans meet their health care needs in the community instead of going to a care facility.
Part B (Medical Insurance)
Part B helps pay the costs of medically necessary health care outside of hospitals, such as doctors' visits, mental health care, physical and occupational therapy and speech-language therapy. Certain lab tests and screenings used to diagnose diseases early are also free, including: mammograms and pap smears, and screenings for cardiovascular disease, HIV and diabetes. The screening for some cancers including cervical, colorectal, prostate and lung is also covered. Note that in most cases a copayment is required to see the doctor who prescribes these tests.
Part B also covers ambulance services as well as 80 per cent of the costs for medical equipment like wheelchairs and scooters and oxygen tanks. Second surgical opinions and, in some cases, third opinions are covered by Part B as well as most of the costs for many diagnostic and treatment services in hospital outpatient departments.
Although Medicare doesn’t cover routine physical exams, newcomers to Medicare are entitled to a one-time “Welcome to Medicare” preventative visit as well as annual wellness checkups after that. In addition, Medicare does not fund most dental care, eye exams related to prescribing glasses, dentures, hearing aids and routine foot care.
In 2015, Americans with incomes under $85,000 paid a premium of $104.90 per month. Those with higher incomes paid more, depending on their income level, up to a maximum of $335.70 per month, according to Medicare 2015 & 2016 Costs at a Glance.
Medicare Advantage Plan (Part C)
The Medicare Advantage Plan is a way of delivering benefits that provides all of the items covered in Part A and Part B and is run by Medicare-approved private insurance companies. To join an MA Plan (there are various types, such as HMO or PPO), you must already have Medicare Parts A and B and live in the plan’s service area. Note that MA Plans vary greatly both in cost and in scope of coverage. In addition to the Part B premium, participants usually pay one monthly premium for the services included in a Medicare Advantage Plan.
Part D
Medicare’s Part D offers prescription drug coverage through private insurance companies. The coverage can vary widely from insurer to insurer and from plan to plan. (Some Part C Medicare Advantage Plans combine medical benefits and prescription drug coverage in one package.) As with Part C, users pay monthly premiums to the private insurers that provide the policy.
We hope this focus on Medicare helps you out—if you think we’ve missed something major please let us know in the comments below!
Learn More About Medicare
Do you have more questions about Medicare? Check out this other post in our Understanding Medicare blog series: Understanding Medicare: Who is Eligible?
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